[Skip to content]

Sign up for our daily newsletter
The Actuary The magazine of the Institute & Faculty of Actuaries

Travel insurers expect record payouts this year

UK travel insurers expect to pay a record £275m to customers this year as coronavirus grounds flights across the world, the Association of British Insurers (ABI) has revealed.

Cancelled flights to cost insurers ©iStock
Cancelled flights to cost insurers ©iStock

Cancellations are predicted to account for the vast majority of this figure, with some costs incurred from disruption overseas.

The ABI said that cancellation payouts are likely to be twice as high as those recorded for the whole of 2019, and will easily dwarf the annual record of £148m paid in 2010.

“At this unprecedented time, travel insurers are helping soften the financial blow for thousands of customers whose travel plans have been cancelled or disrupted by coronavirus,” ABI assistant director Mark Shepherd said.

“Along with compensation from sources, such as airlines and credit card providers, travel insurers are helping customers get through these tough times.”

The coronavirus payouts will exceed the £62m of cancellation and disruption payments made following the Icelandic volcanic ash cloud in 2010.

A total of 400,000 claims are expected, compared to the 294,000 cancellation and disruption claims received in the whole of 2010, the previous highest year on record.

Travel insurance firms have agreed a series of pledges to ensure extra support for customers, including having in place contingency plans to deal with valid claims as quickly as possible.

Meanwhile, the ABI has produced a guide to help customers understand their insurance policies, providing detailed information and advice during this unprecedented crisis.

“Insurers know this is an incredibly difficult time for families and businesses as people seek to make the right decisions for their own health and that of their family,” the ABI said.

“Their main priority is to make sure their customers can continue to have their claims paid in this challenging environment and they are doing everything in their power to keep their operations running as fully as possible and to offer clear and up-to-date information to their customers.”

Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession